Canaccord: Fortuna Silver Among Lowest Cost Silver Producers

In a report published Tuesday, Canaccord Genuity analysts maintained a Buy rating on

, with a price target of C$6. Fortuna reported its 1Q15 EPS at $0.03, ahead of the Canaccord Genuity estimate. The beat was driven by lower cash costs. Unit costs at San Jose stood at $59.79/tonne processed, which was below the guidance by 5 percent. It was helped mostly by the devaluation of the peso and lower energy rates. Costs at Caylloma, at $83.99/t, were 7 percent below the guidance, helped by devaluation of the sol and lower distribution costs related to transporting the zinc concentrate. AISC of $11.79/oz was significantly below the guidance for the year, helped partly by the "low level of spending on the dry stack tailings project in the first quarter." "We continue to believe that AISC guidance may prove to be conservative if foreign currency tailwinds experienced in Q1/15 continued to be a factor," the analysts mentioned. In the report Canaccord Genuity noted, "Fortuna remains one of our top picks in the silver producer space due to the estimated strong organic production growth rate (60% from 2014-2018) with a low associated risk - all of the growth is from currently producing assets." "On March 30, the company announced an amended credit facility, moving from a $40 million revolving credit facility to a $40 million non-revolving term loan and a $20 million revolving credit facility, providing sufficient cushion in a low commodity price environment, in our view," the analysts added.